Eligibility for a Businessloan is decided on the basis of nature of business,
Turnover of Business, Income tax Return, Credit History and repayment capacity
of the Business entity.

4

Loan Amount

The loan amount is decided by the valuer after assessing the Gold jewellery on the basis of
quality (above 18 kt.) and quantity (weight in gms.).

The loan amount is decided by the lender on the basis of Business Turnover,
its ITR and its credit history i.e its Repayment capacity to return the loan.

5

Collateral

As these are secured loans, Gold jewellery is pledged as collateral in order to avail a
Gold Loan.

These loans are unsecured loans i.e offered without any collateral or security. However, before
sanctioning the loan, banks check credit score, age and past income statements of the business

6

Credit history

No Credit history or score is required in order to avail a gold Loan.

A good Credit history or Score is must for an individual in order to avail a business loan.

7

Income Proof or ITR

You need not provide any Salary slip or Income proof or ITR in order to avail
a Gold Loan.

Income proof or ITR statement is must in order to avail a Business Loan.

8

Documents required

Very less documentation is required in order to avail a gold loan. You just need to provide a
simple address (Aadhar Card/Driving License/Voter ID Card/Passport etc) and Identity proof
(Pan Card, Aadhar Card, Passport etc) for KYC.

Along with Address proof and Identity proof, the borrower is required to present bank account statements
of atleast last 6 months, Income Tax Returns of last 3 years, Proof of Business and ownership of the
posessions the are used in Business.

9

Loan Tenure

Gold Loans are usually Short Term Loans. Generally, you can avail a gold loan for up to 1 year
which can further be extended to 3 years depending on your requirements.

Business Loans are usually short term and medium term loans. You can choose the tenure as per your
requirement. Generally, Loan tenure ranges between 12 months to 60 months.

10

Processing Fees

Very Little processing fees or charges are levied by the Banks or NBFC for availing a Gold Loan.
Generally, it is NIL to 1 %.

Business loan indulges high processing fees or charges as compared to a Gold Loan.
Generally, it is 1 % to 3 %.

11

Repayment Options

Gold Loan offers Flexible Repayment Options. Here, you have the optionto pay interest on Monthly,
Quarterly, Half yearly or Yearly basis depending upon your Loan plan. You can choose any of the
options as per your convenience.

Business loans doesn’t come up with loan flexible repayment options. You have to repay
your loan in equal amount or EMI once chosen as per the tenure of the loan.

12

Prepayment or Foreclosure
Charges

Generally it depends upon Banks/NBFC.You can close a Gold Loan any time by paying very less or
NIL prepayment charges. Normally, it is NIL to 1 %.

Generally, it is 1 % to 5 %. You have to pay higher prepayment or foreclosure charges as
compared to Gold Loan.

Bank Vs NBFC: Which is the Best?

Comparison between the 2 is done to rule out the one which offers Lowest Interest Rates and Maximum convenience to the Borrower for availing Gold Loan.

Bank:

Banks are financial institutions which are regulated and are licensed by Reserve Bank of India (RBI) to receive deposits and offer loans. They also offer services like issuing of cheques and demand drafts. provide financial services such as wealth management services and currency exchange. Banks include both public and private sector banks like State Bank of India, Punjab National bank, ICICI Bank, HDFC Bank etc.

NBFC:

NBFCs are financial institutions that are allowed to lend and make investments like that of banks but do not hold banking license and are not allowed to :

accept demand deposits

do not form part of the payment and settlement system and cannot issue cheques drawn on itself

deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Nowadays, many people find themselves in a dilemma whether to choose Bank or NBFC for taking a Gold Loan. There are certain factors and risks associated which must be considered by you while making a Decision.

We, at GoldLoanBazaar.com, have conducted detailed research and analysis on ” Bank vs NBFC ” which may help you to get out of the dilemma and make the right choice based on the factors stated below:

1) Interest Rates:

The rate of interest is one of the main aspects of all types of loans. NBFC usually charge a higher rate of Interest as the cost of funds for NBFC is higher and they are not authorized to accept funds in form of Demand Deposits. The Rate of Interest charged by Banks is much lower as Banks have got access to low-cost funds that they accept in form of deposits from the public. Also, there is a high risk of defaults in case of NBFC, so they charge higher interest rates to offset the unforeseen losses. You can save your hard earned money by Comparing Gold Loan Interest Rates and making the decision accordingly.

2) Loan-to-Value:

Loan to Value ratio, popularly called as LTV, is usually less in case of NBFC. As per RBI guidelines, NBFC is allowed to provide up to 75% of LTV of Gold pledged as collateral. This is mainly because of the high risk of default in case of NBFC. Whereas, banks offer higher Loan to Value (LTV ) which may be as high as 85 %.

3) Time Taken for Gold Loan Disbursement:

Gold Loan in 2 or 5 or 10 minutes is none other than a myth or a marketing Gimmick. It is most commonly adopted by the NBFC to lure customers for getting quicker and faster loans. In practicality, it’s impossible to evaluate the gold, its processing and loan disbursement in such a short span of time. You must not get flattered by such practices and offers.

But indeed, most banks and NBFC usually takes around 30 minutes to a few hours. It depends on the fulfillment of their eligibility criteria and the documents required to avail the loan. Needless to say, the Gold loan is the easiest and fastest way to get liquidity as compared to its most sought alternative i.e. personal loan.

4) Disbursement of Cash:

The banks do not pay in cash for the loan amount sanctioned by them. All the sanctioned loan amount is transferred to Borrowers bank account either by the way of Cheque or Account transfer or NEFT/RTGS as desired by the Borrower. But NBFC is allowed to disburse gold loans only up to Rs 20,000 in form of cash(as per RBI guidelines. Earlier it was Rs 1,00,000). For loans amounting above Rs 20,000, NBFC also goes cashless. They transfer loan amount either by the way of Cheque or NEFT/RTGS directly in Borrowers Bank account. This move is in line with the rules issued under the Income-tax Act.

5) Bank Vs NBFC Regulation:

All the banks are regulated by RBI whereas NBFC is a company registered and regulated under the Companies Act, 1956.

6) Gold to be Pledged:

As per RBI guidelines, Banks are only allowed to accept Gold Jewellery and Gold Coins (only up to 50 grams and of 99.99 % purity issued by Banks only in India ). Whereas NBFC is only entitled to offer Loans against Gold Jewellery only. NBFC is not allowed to offer Loans against Gold Coins.

7) Carat Requirement:

Minimum carat requirement in case of both banks and NBFC is 18 ct (75 % Gold Purity ) to 24 ct. Jewelry below 18 carats is not considered eligible for Gold Loan. Pledging spurious or fake Gold Ornaments for taking Loan is a punishable offense under IPC. This could end you up in Jail.

8) Gold Loans for Agriculture Purposes:

Banks provide special interest rates which are usually lower as compared to Normal Interest rates for Agriculture Gold Loans. Here, the borrower has to provide the proof of Landholding to get benefits. Concessional Loans are also offered to senior citizens and Women. Whereas, most of the NBFC does not offer any concessional or special interest rates for such Loans.

On the Basis of the above factors, one can easily differentiate between Bank vs NBFC and make the decision accordingly.

Being Secured Loans, Gold Loans are offered by various Banks/NBFC at very Lower and competitive interest rates usually at 10 % to 14 %. Some NBFC charge even higher.

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Being Unsecured Loans, the interest rate charged is usually high ranging from 14 % to 24 % or even higher.

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2

Time Taken for Loan Sanction and Disbursement

It is a very less time-consuming process. Usually, it takes around 30 minutes to an hour to completely process and disburse the loan.

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It is a time-consuming process. It usually takes around 1 day to a few weeks depending on the availability of documents.

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3

Eligibility

You can get a Gold loan if you have Gold Jewellery (above 18 ct.), Address and ID proof.

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Eligibility for the Personal loan is decided on the basis of repayment capacity of the applicant. Salary Proof or Income proof depending upon the type of employment.

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4

Loan Amount

The loan amount is decided by the valuer on the basis of quality (above 18 ct.) and quantity (weight in gms.) of Gold ornaments to be pledged in order to avail a loan.

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The loan amount is decided by the lender on the basis of salary and income of the borrower i.e. its repayment capacity.

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5

Collateral

You have to collateral Gold Ornaments in order to avail a Gold Loan.

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You need not provide any collateral security in order to avail a personal loan.

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6

Credit History

No Credit History or CIBIL score is required by the borrower in order to avail a Gold loan

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Credit History or CIBIL Score is a must for an individual in order to avail a Personal Loan.

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7

Income Proof or ITR

You need not provide any income proof or ITR is in order to avail a Gold Loan.

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You have to present Income Proof/ ITR in order to apply for a Personal loan.

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8

Documentation

Very less documentation is required in order to avail a gold loan. You just need to provide a simple address (Aadhar Card/Driving License/Voter Card/Passport etc) and Identity proof(Pan Card, Aadhar Card, Passport etc) for KYC.

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Along with Address proof and Identity proof, the borrower is required to present its Salary proof in case of salaried and Income tax return in case of self-employed business or professional and Bank A/C statement. Apart from this, Good Credit History or CIBIL score is must criterion in order to avail a personal loan.

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9

Loan Tenure

Gold Loans are usually Short Term Loans. Generally, you can avail a gold loan for up to 1 year. You can further extend it to 3 years depending on your requirement.

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Personal Loans are usually for short term and medium term loan. You can choose the tenure as per your requirement. Generally, Loan tenure ranges from 1 year to 7 years.

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10

Processing Fees

Very Little processing fees or charges are levied by the Banks or NBFC for availing a Gold Loan. Generally, it is NIL to 1 %.

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Personal loan indulges high processing fees or charges as compared to a Gold Loan. Generally, it is 1 % to 3 %

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11

Repayment Options

Gold Loan provides Flexible Repayment Options. Here, you have the option to pay interest on Monthly, Quarterly, Half yearly or Yearly basis depending upon your Loan plan. You can choose any of the options as per your convenience.

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A personal loan doesn’t provide any flexible repayment options. You have to repay your loan in equal amount or EMI once chosen as per the tenure of the loan.

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12

Prepayment or Foreclosure Charges

You can close a Gold Loan any time by paying very less or NIL prepayment charges. It depends upon Banks/NBFC. Generally, it is NIL to 1 %.

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You have to pay higher prepayment or foreclosure charges as compared to Gold Loan. Generally, it is 1 % to 5 %.

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Gold Loan vs Personal Loan:

Summary: As per the above comparison, 10 out of 12 features clearly states that Gold Loan is highly preferable and most Liked Loan option as compared to above Personal Loan. Therefore, a Wise Person must always compare different Loan options before making a Final Decision.

Gold Loan vs Personal Loan: Which one to Choose?

Gold Loans are way better in terms of ease of availability, lower interest rates, fast processing with minimal documentation.

Even an unemployed person who isn’t eligible for a personal loan can avail a Gold Loan.

You will get Concessional Interest rate by the Banks if Loan taken for Agricultural purposes or availed by a woman.

Most beneficial for meeting short-term expenses or unforeseen emergencies.

Banks also offer overdraft facility against Gold to Businessman to meet the short-term working capital requirement of Businesses.

You will get full compensation for the gold in case of any Thefts, fire etc.

Agriculture Gold Loan is a loan that are granted to farmers or agriculturalist for seasonal agriculture operations. These are availed by pledging their gold ornaments/jewellery. These is the best loan option in order to get instant liquidity to meet the crop cultivation costs, acquiring and applying inputs such as seeds, fertilizers, insecticides, buying cattle, purchase of equipment for irrigation, and to meet the labor costs for all operations in the field for raising & harvesting the crops.
In short, it is taken to meet the current expenditure requirement for raising the crops on land till the crops are harvested.

Eligibility for Agriculture Gold Loan:

Proof of land holding and land records related documents
Age group of 18 and up to 75 years

Benefits of Agriculture Gold Loan:

You can avail an Agriculture Gold Loan at Lower Interest rates in comparison to general Interest Rates on Gold Loan.

Gold Loans in India are getting very popular and its demand is growing day by day at a very fast pace. This is only because of the key feature they offer like Low-Interest Rate, Instant Finance and Convenience associated with it. No one has to sell its gold jewellery now for liquidity, one can easily do so by pledging their gold ornaments to avail Loan.

Gold Loans in India are gaining popularity mainly because of:

Lower Interest Rate:

Being a Collateral/Secured Loan, One of the main and supreme advantages of Gold Loan is that these are offered at very Lowest Interest Rates. As the risk factor assumed by the lender is less, the benefit for such is passed on to the borrower by the lender. Thus, Banks and NBFC provides Gold Loans at Cheaper Interest rates. Normally Gold loans are provided at 10 – 16 % per annum which is very low as compared to Personal Loans which are normally available at 15 – 28 % per annum. Bank also offers Concessional Interest Rates for loans obtained for Agriculture purposes and gold loans availed by women.

Less Documentation:

Unlike other unsecured loans like personal loan, gold loans do not require a lot of documents. You can avail Gold Loans with very Minimum documentation. A Valid Address and Identity proof and passport size photographs are just enough in order to obtain a Gold Loan. The ID and Address proof documents include Ration Card, Voter ID card, Driving License, Passport or Aadhar Card among others. There is no need to present Gold Ornaments Purchase Bill or proof of ownership of Gold ornaments. But the borrower must keep in mind that pledging Stolen/Theft Jewellery to obtain a loan is a punishable offense under IPC and engaging in such activities can end you up in Jail.

No Income Proof Required:

Bank / NBFC doesn’t demand ITR or Income certificate showing your Income or salary to avail a Gold Loan. Most of the Banks/NBFC doesn’t require or checks the Credit history of the Borrower. Even an unemployed individual or person having no or poor credit history can avail Gold Loan.

Flexible Loan Duration and Easy Repayment Options:

Gold loans are the most flexible loans among both secured and unsecured loan categories like Home Loan, Personal Loan, Small Business Loans etc. Most of the Banks/NBFC offer flexible loan duration’s ranging from 7 days and up to 48 months. This allows and entitles the borrower to repay the loan as per his/her own convenience. Unlike other loans, Banks /NBFC charges very less to no penalty or charges for prepayment or foreclosure of your Loan.

No Guarantor or Co applicant Required:

Unlike other Loans, be it secured or unsecured like a small business loan or personal loan, you are not required to present any Guarantor or Co-Applicant in order to avail the Gold loan. You can just visit the bank carrying your Gold ornaments against which you require a loan, your address and identity proofs. Authorized Valuer or Appraiser appointed by the lender will evaluate the purity of your Gold ornaments and will sanction and disburse loan immediately on its basis.

Instant Liquidity and Quicker Processing:

Gold loan gives an opportunity for people to liquefy their Gold Jewellery and use it for financing purposes. If you require money for Kids Education or Medical Emergency or Business operations or to fulfill any other financial need, you just require your gold jewellery. So instead of keeping the gold idle at home or locker, Loan against gold is the best option

Less Time Consuming process:

Availing Gold Loan is a very less Time-Consuming process. All it takes around 30 minutes to a few hours for Gold Loan processing and final disbursement. Also, Save time by Comparing Gold Loans and Apply online Instantly at Gold Loan Bazaar.